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  • Writer's pictureMichael McClanahan

Does it Make Sense to Bootstrap a New Business Opportunity?


Resourcing potential business ventures is both rewarding and challenging. Bootstrapping enables entrepreneurs to use unique and innovative ways to raise resources to bring ideas to life in the marketplace. Instead of selling an idea and getting the buy-in from venture capitalists or borrowing from outside sources, the entrepreneur utilizes their funds. There are many reasons why aspiring business owners choose the bootstrapping path over the more conventional financing methods.

 

Complete control of the business and not having to yield to other external investors enables the prospective business owner to bring their dream to life. Decisions are made independently, and designing and shaping the company comes from the passion and drive of its creator’s original vision. The owner is devoid of compromise, and they can solely direct their attention to the voice of the customer. However, limited resources and business knowledge may impair growth, and the entrepreneur may encounter constraints based on factors such as marketing, hiring, and financial strategies that would have enabled the business to grow faster if they engaged external professionals to help early in the process.

 

Many times, business owners want the autonomy and flexibility that bootstrapping brings to the table. Whether it enables freedom from running the business from a consensus management approach to quickly adapting to ever-changing market conditions, a future business owner wants the ability to make decisions without getting entangled with the bureaucracy. One of the biggest pitfalls in this approach resides in not having the support systems and experience to create the ultimate decision. What might sound good in theory and on paper can result in a bigger problem. Flexibility is crucial to adapt to the disruptive business environment today, but the future business owner must also recognize their limitations to overcome rookie mistakes.


Maximizing the return on one’s investment by avoiding interest payments or sharing an equity stake with investors allows entrepreneurs to be cost-effective when they bootstrap. Sometimes, bootstrapping may be the only option to carry the dream to the marketplace. The business owner could face limited funding options and no access to more traditional funding resources such as venture capital or bank loans. Future business enterprisers may also want to avoid sharing the pot with others or paying extra money to a bank. Entrepreneurs may also like that bootstrapping enables them to save a significant amount of money over the long haul and provide additional money in the long run for them to do with it as they see fit.

 

Validating the business idea as early as possible is imperative to ensure the business model is viable and can generate revenue. Bootstrapping enables quick wins and gives entrepreneurs the buy-in they might need for future expansion or an opportunity to sell the idea and move on to the next. Also, a lean operating model may be what it takes to prove the concept in the marketplace and lead to a more robust, sustainable business model for the future. The bootstrapping approach also gives the future business leader valuable experience in managing a business with limited resources. It can also provide a means to learn the business fundamentals of financial management, resource allocation, and strategic decision-making.

 

Bootstrapping is a standard method for many entrepreneurs and aspiring business owners focusing on generating revenue in the early stages of business. The approach prevents the owner from conceding or sharing their ideas with others or repaying interest or debt because of standing up the business. Focusing on the customer and crafting the desired outcomes can lead to stronger customer relationships and allow the owner to quickly adapt to an ever-changing market. Fundamentally, bootstrapping is a strategic choice designed to align with the outcomes, situations, and circumstances enabling entrepreneurs to thrive in a fickle marketplace.


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